Producer prices fell from June to July, according to data from the Producer Price Index (PPI).
– The prices that Norwegian industry receives for their goods have been relatively stable over the past year, especially when compared to the exceptionally strong price growth we witnessed from mid-2021 to mid-2022, says head of division for price statistics at Statistics Norway Espen Kristiansen.
From June 2021 to July 2022, prices of manufactured goods in the PPI increased by over 35 percent.
– Since last summer, industrial prices have experienced some fluctuations, but they have been declining for three consecutive months since April this year, says Espen Kristiansen.
For the metal industry, the price growth picked up towards the end of 2020, as depicted in the figure below. It increased significantly throughout 2021, before reaching a peak in May 2022. From May 2022 to November 2022, prices experienced a notable decline, before stabilizing somewhat. Subsequently, they decreased by 3.4 percent from June to July this year.
In the figure, we can also observe that the prices of chemical products followed a similar trend to the metal prices in the same period, albeit with slightly more moderate changes. From June to July this year, the prices of chemical products decreased by 3.7 percent. There were also price declines in fish and petroleum products in the last month.
– Fish, metals, and chemical products are goods that are largely exported, and we can see that in recent months, it's the prices abroad that are causing the overall price development for the industry to decline, says head of division for price statistics at Statistics Norway Espen Kristiansen.
The Norwegian krone has strengthened against the euro over the past couple of months, and against the US dollar (USD) from June to July, which could have contributed to falling export prices. When the krone strengthens, Norwegian exporters receive fewer kroner for the goods they sell in foreign currency.
Declining price growth for food products
The prices of food products increased by 0.1 percent from June to July, thereby mitigating the decline in industrial prices last month.
Although food prices slightly rose in July, we have witnessed a significant decrease in the rates of change over the past few months when comparing to the same month last year. In the latter half of 2022 and the early months of this year, the twelve-month growth rate for prices in the food industry was around 20 percent. In recent months, the growth has decreased sharply, and in July, the price growth was at 8.1 percent compared to the same month last year.
The prices of meat and meat products increased by 1.2 percent, while the prices of fruits and vegetables rose by almost 5 percent from June to July. Norway has limited exports of both food types, and they are mostly goods sold in the domestic market.
On the other hand, as mentioned earlier, Norwegian seafood producers sell a significant portion of their products abroad. The producer prices of seafood decreased by over 3 percent, mitigating the price increase of food products in July.
A decrease in the price of natural gas.
The Producer Price Index (PPI) fell by 2.9 percent from June to July. It was the extraction of crude oil and natural gas that had the largest contribution to the fall, with the decrease in natural gas prices weighting in the heaviest. The price of crude oil experienced a slight increase. The price of gas has fallen by over 80 percent since the peak level in August last year. One must go back to June 2021 to find a lower level of the gas price.